Views on the bills
The committee received a total of six submissions for this inquiry.
Support for the bills
Despite raising some specific concerns, the submissions received were
supportive of passing the legislation. The Department of Industry, Innovation
and Science submitted:
The bill package will have a positive impact on Australia’s
relationship with Timor-Leste and lays the groundwork for a strong bilateral
relationship going into the future. The bill package, through implementing the
treaty, settles a long-running dispute over the maritime boundaries between our
countries and creates a pathway for the development of the Greater Sunrise gas fields,
the economic benefits of which will be substantial, particularly for
Timor-Leste...Overall, the bill package fundamentally demonstrates Australia’s commitment
to a robust, mutually beneficial bilateral relationship with Timor-Leste
specifically, and to international law and the rules based order more
The Uniting Church of Australia's Synod of Victoria and Tasmania
The Synod of Victoria and Tasmania welcomes the treaty and
the spirit in which the Australian Government negotiated it. The Synod
therefore requests that the Committee recommend the rapid passage of the bills
through the Australian Parliament.
History and outcomes of previous
The territory of today's Timor-Leste has existed under three legal
jurisdictions since the early 1970s: as part of Portugal's overseas
possessions; an annexed province of Indonesia; and as an independent
nation-state. This reality has effected interpretations and negotiations of its
sea boundary and the ownership of the region's oil and gas deposits.
A number of submitters commented on the length of time required for a treaty
which recognised Timor-Leste's claims to be negotiated and signed, and how this
had, in some quarters, undermined Australia's international standing.
Professor Andrew Serdy observed:
I thus agree with the explanatory memorandum to the bills when
it contends that it would be damaging to Australia's international standing to
prevent the 2018 treaty entering into force by not passing these bills. I would
merely add that this would compound the earlier, and as far as the boundary
itself is concerned now irreparable, damage to the national interest from the
counterproductive post-1999 policy, and the bills are hence a necessary
exercise in damage limitation.
Fate of revenues already collected
The Uniting Church of Australia's Synod of Victoria and Tasmania questioned
the fate of revenues raised prior to the treaty's signing. It commented:
The Synod is concerned that the Australian Government will
continue to hold onto all the revenue gained from the gas and oil deposits that
have been exploited before this treaty was finalized, that had this treaty been
in place the Australian Government would not have had access to...
Regulatory equivalence and taxation
The new treaty arrangements are intended to ensure conditions and terms
equivalent to existing arrangements. Eni Australia, an energy company which is
also operating in the Joint Petroleum Development Area (JPDA) between Australia
and Timor-Leste established in 2002 under the Timor Sea Treaty, reiterated the
need for such arrangements to continue:
A condition of the transition from JPDA to exclusive
Timor-Leste jurisdiction is that petroleum activities shall continue on terms
of 'conditions equivalent' (legal, fiscal and operational).
The details of how 'conditions equivalent' will be achieved
under the new legal and fiscal regime in Timor-Leste is still the subject of
negotiation, and is to be agreed by all parties. The [Production Sharing
Contract] PSC in the JPDA are subject to project-specific legal, fiscal, and
operational regimes, and accordingly there are effectively unique rules for
Re-drafting of the PSCs is required to recognise the change
in sovereignty and maintain conditions equivalent, and is a joint effort
between the representatives of Australia and Timor-Leste Governments and the
Contractors of the PSCs.
Eni also made specific reference to 'fiscal equivalence' and expressed
its interest in understanding the Australian legislative mechanism which will
lead to such equivalence.
The Uniting Church of Australia's Synod of Victoria and Tasmania raised
questions on tax arrangements. The Church commented:
The Synod is not clear how the overly generous tax credits
related to the Petroleum Resource Rent Tax (PRRT) will be treated for the
corporations that have operated Greater Sunrise projects since 2004. The Synod
believes the Committee should ensure that the tax credits granted by the
Australian Government to corporations that have been operating in the Greater Sunrise
area do not impact on any future royalty revenue imposed by the Timor Leste Government
on the corporations involved.
The decades long question of ownership of the oil and gas deposits lying
between Timor-Leste and Australia has, despite many years of controversy, now
finally been resolved. The bills presented to the Parliament bring legislative
substance to the 2018 treaty and the evidence received from submitters
indicates support for the bills and their provisions.
The Committee notes the concerns expressed in the submissions,
particularly with regard to expressed need for equivalent conditions between
previous arrangements and those that will apply in the future, and observes
that these bills are only the first tranche of legislation designed to give
effect to the treaty.
The Committee agrees that the treaty and supporting bills support Australia's
commitment to a mutually beneficial bilateral relationship with Timor-Leste
specifically, and to international law and the rules based order more generally
and recommends that the bills be passed.
The Committee recommends that the bills be passed.
Senator Jane Hume
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